The real IRS scandal

Thursday

May 30, 2013 at 12:01 AMMay 30, 2013 at 12:22 PM

It’s not that that Determinations Unit enforced the legal requirement that 501(c)(4) tax exempt designations unfairly on Tea Party groups, though it certainly used questionable methodology in selecting applications for further scrutiny. Far as I know, that unit didn’t officially deny any applications. The real scandal is that the IRS gave tax-exempt designations to Republican and Democratic organizations explicitly devoted to political, as opposed to social welfare, purposes.

OpenSecrets.org estimates that 501(c)4s spent $92 million in the 2010 election. They spent $254 million in the 2012 election. Why was that allowed by the IRS? It’s not like the existence of Crossroads GPS, Priorities USA or other large 501(c)(4)s was a secret. Even Stephen Colbert had one, which he named “Colbert Super PAC SHH.”

As Ezra Klein noted recently:

Their missions are more than political. These groups are, in many cases, clearly birthed by political parties and campaigns. Karl Rove’s Crossroads acted like a shadow Republican National Committee in the 2012 elections. Bill Burton’s Priorities USA was clearly dedicated to reelecting President Obama. The idea that their 501(c)4s weren’t primarily devoted to influencing American politics defies belief. And the same could be said for the tea party groups formed after the 2008 election, or the 501(c)4 created by the Center for American Progress.

The danger is that this experience will simply make the IRS even more terrified of regulating 501(c)4s. Recall that none of the tea party groups scrutinized by the agency actually lost the 501(c)4 designation. Even at their most attentive, the IRS is treating these groups with kid gloves. Now they’re going to be tempted to leave them almost entirely alone.

I know there have been volumes written already about this, and everyone in Washington is investigating it. I’m sure there are lots of details I’ve missed, so maybe someone else can explain to me why the IRS didn’t just make it clear that 501(c)(4) status is for social welfare organizations, and if the IRS finds out after the fact that the majority of money raised by the organizations is spent on campaigns, not social welfare, the status would be revoked, the donations would no longer be tax deductible and the organization forced to make its donors public.

Rick Holmes

It’s not that that Determinations Unit enforced the legal requirement that 501(c)(4) tax exempt designations unfairly on Tea Party groups, though it certainly used questionable methodology in selecting applications for further scrutiny. Far as I know, that unit didn’t officially deny any applications. The real scandal is that the IRS gave tax-exempt designations to Republican and Democratic organizations explicitly devoted to political, as opposed to social welfare, purposes.

OpenSecrets.org estimates that 501(c)4s spent $92 million in the 2010 election. They spent $254 million in the 2012 election. Why was that allowed by the IRS? It’s not like the existence of Crossroads GPS, Priorities USA or other large 501(c)(4)s was a secret. Even Stephen Colbert had one, which he named “Colbert Super PAC SHH.”

As Ezra Klein noted recently:

Their missions are more than political. These groups are, in many cases, clearly birthed by political parties and campaigns. Karl Rove’s Crossroads acted like a shadow Republican National Committee in the 2012 elections. Bill Burton’s Priorities USA was clearly dedicated to reelecting President Obama. The idea that their 501(c)4s weren’t primarily devoted to influencing American politics defies belief. And the same could be said for the tea party groups formed after the 2008 election, or the 501(c)4 created by the Center for American Progress.

The danger is that this experience will simply make the IRS even more terrified of regulating 501(c)4s. Recall that none of the tea party groups scrutinized by the agency actually lost the 501(c)4 designation. Even at their most attentive, the IRS is treating these groups with kid gloves. Now they’re going to be tempted to leave them almost entirely alone.

I know there have been volumes written already about this, and everyone in Washington is investigating it. I’m sure there are lots of details I’ve missed, so maybe someone else can explain to me why the IRS didn’t just make it clear that 501(c)(4) status is for social welfare organizations, and if the IRS finds out after the fact that the majority of money raised by the organizations is spent on campaigns, not social welfare, the status would be revoked, the donations would no longer be tax deductible and the organization forced to make its donors public.